27 April 2016

Do we need Austrian nobility to protect land?

Flip writes*

Even though sometimes forgotten, nature provides many great economic services that we all benefit from on a daily basis. In The Hague the dunes’ ability to purify water has provided clean drinking water for its inhabitants for many generations. Through trial and error mankind has discovered that letting self-interested people have free access to a depletable resource leads to over-extraction of given resource if there is not enough of the common good. In the dune example, people might extract more purified water than the dunes provide. This is a big problem. Some might even call it a tragedy.

As a solution to this problem, Ed Dolan suggests that an extremely radical solution would be to put the commons all up “for auction, and let the highest bidders regulate and economize on their use."1 Dolan calls this solution extremely radical, but how radical is it really?

The setting of the answer to this question is Austria -– a medium sized country in central Europe. Before Austria became Austria, they formed the ‘Austria’ part in Austria-Hungary, a large central European empire ruled by the almost divine (linked to the Vatican) and powerful Habsburg family. This family ruled the empire from its capital Vienna (but sometimes switched to Budapest to make that part of the empire feel respected also). In the provinces of the empire, noble families ruled from their castles and citadels and owned most of the land surrounding it. Just like a modern-day state, they let people use the land to make a living (they leased it).

The private ownership of the land by these families meant that they were governed sustainably, with an eye on the future. Strict controls made sure that people did not overuse the land they had been given or the common resources. Noble families ruled the lands with long-term in mind. This was so because:

The chances of nature being bought or stolen from you were very small. Large-scale theft of for example wood required machinery that had not been invented yet, whilst the market for large patches of land was quite small (you needed quite a bit of money and nerves to approach a landlord to buy his land).

There was a lot of pride involved in handing over as much of your lands intact as possible to your offspring (only sons though, daughters couldn’t possibly be asked to take on such heavy responsibilities like managing lands).

All of the above made sure that Austria’s many natural resources were not exhausted, but were kept alive for current generations to destroy use.

Bottom Line No. The bottom line is not that we should reinstall Austrian nobility. The core message of this story is that for much of the world (everything but the ‘new world’ really) the idea of privatized commons isn’t as radical as libertarian economists think.(1) Page 64 of TANSTAAFL. The full title -- There Ain’t No Such Thing As A Free Lunch: A Libertarian Perspective on Environmental Economics -- is rather long, but the 2011 book suggests good market solutions to environmental problems (DZ's review)
* Please comment on these posts from my environmental economics students, to help them with unclear analysis, alternative perspectives, better data, etc.

1 comment:

I really enjoyed the analogy between Dolan's idea of parks owned by wildlife conservation groups and medieval Austria's lands owned by nobility. However, I think we need to be careful about the reasons that make seemingly the same environmental management solution very different in the world of Austrian nobility compared to the world contemporary conservation groups. I will mention two such reasons.

Firstly, land in medieval times was not exactly privately owned. Yes, technically Austrian lords rented their land to peasants, receiving a share of the crops and labor days as annual payment, but their idea of who ‘owns’ the land was very different than ours. There was a stratification of property rights over the same land, starting with the king who had 'dominium eminens' and ending with the peasant families who could not be driven off their piece of land and could pass the right to use it to the next generations. This is why, as Polanyi argues in chapter 3 of “The Great Transformations”, enclosures in the early modern times were met with much resistance, both by peasants and by the government: they were seen as deeply unfair and disrupting to society. It could be that the stratification of property rights contributed to restraining the behavior of Austrian nobility, who otherwise might have overused and mismanaged their land.

In fact, this is what happened when the market made it possible for nobility to earn profits by enclosing their lands. Polanyi mentions on page 36 that the privatization and commodification of land went wrong in some places: “The sheep which "turned sand into gold" could well have turned the gold into sand as happened ultimately to the wealth of seventeenth-century Spain whose eroded soil never recovered from the overexpansion of sheep farming.”

Secondly, the success of nobility management of land had a lot to do with other preferences and beliefs, for instance the belief that donating land to the church was a good way to secure one’s place in the afterlife. Dolan explains at length how our beliefs about a throughput economy keeping separate accounts from nature (instead of the more accurate representation of Earth as a spaceship) underpin our property rights. The church was indeed a major owner of land in medieval times, but we cannot call that land private: it was in a way a source of public good, as much as the services of the church (like soul delivery to heaven) were considered to serve all. Beliefs in the efficacy of donating land to church as a way to afterlife were complemented with more worldly concerns, such as how to ensure the livelihood of those noble children who were not the first born and thus could not inherit the family land. In this case, it was always an option to donate a piece of well-kept land to the church with the expectation that the later born young fellow would be appointed bishop or get onto some other church career path (https://www.reddit.com/r/AskHistorians/comments/1sqnmf/how_did_the_church_become_europes_largest_land/ ).

Privately owned parks in the contemporary world would benefit neither from the institution of stratified property rights nor from the belief that land and forest can get you into eternity. On the other hand, there are other reasons to care more about environmental management today (for instance, that we are likely to ruin human civilization with global warming). So perhaps wildlife conservation groups would perform at least as well as Austrian nobility in managing lands and forests.